Correlation Between American Creek and Capitan Mining
Can any of the company-specific risk be diversified away by investing in both American Creek and Capitan Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Creek and Capitan Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Creek Resources and Capitan Mining, you can compare the effects of market volatilities on American Creek and Capitan Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Creek with a short position of Capitan Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Creek and Capitan Mining.
Diversification Opportunities for American Creek and Capitan Mining
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Capitan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding American Creek Resources and Capitan Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitan Mining and American Creek is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Creek Resources are associated (or correlated) with Capitan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitan Mining has no effect on the direction of American Creek i.e., American Creek and Capitan Mining go up and down completely randomly.
Pair Corralation between American Creek and Capitan Mining
Assuming the 90 days horizon American Creek Resources is expected to generate 1.13 times more return on investment than Capitan Mining. However, American Creek is 1.13 times more volatile than Capitan Mining. It trades about 0.08 of its potential returns per unit of risk. Capitan Mining is currently generating about 0.09 per unit of risk. If you would invest 13.00 in American Creek Resources on September 13, 2024 and sell it today you would earn a total of 9.00 from holding American Creek Resources or generate 69.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Creek Resources vs. Capitan Mining
Performance |
| Timeline |
| American Creek Resources |
| Capitan Mining |
American Creek and Capitan Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Creek and Capitan Mining
The main advantage of trading using opposite American Creek and Capitan Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Creek position performs unexpectedly, Capitan Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Capitan Mining will offset losses from the drop in Capitan Mining's long position.| American Creek vs. Gold79 Mines | American Creek vs. Arctic Star Exploration | American Creek vs. American Clean Resources | American Creek vs. Arras Minerals Corp |
| Capitan Mining vs. Gold79 Mines | Capitan Mining vs. Arctic Star Exploration | Capitan Mining vs. Arras Minerals Corp | Capitan Mining vs. American Creek Resources |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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